Author: Meg Kauthen, Sustainability Designer

Social or ‘S’ issues present one of the biggest risks and opportunities for the resource sector, according to EY’s risk analysis for 2021. While there has been significant progress and emphasis by the sector on Environmental, Social and Governance (ESG) in recent years, some companies have struggled to execute ‘S’ initiatives in their surrounding communities they operate in.

At Business for Development, we have been implementing community development programs in Asia-Pacific and East Africa, supporting resource sector ESG strategies for over a decade. There is no silver bullet to implementing ‘S’ initiatives, and it is not easy anywhere in the world. From our own on-the-ground experience, here are our top five considerations when developing ‘S’ initiatives to support surrounding communities.

1. The ‘S’ is all about the people. Social initiatives seek to address the relationships your company has and the reputation it fosters with people and institutions in the communities where you do business. In other words, ‘S’ initiatives form the basis for your social license to operate and ensure you leave a positive legacy.

One of Business for Development’s principles is to be empathic and compassionate – we seek to understand the needs of everyone we work with. Seeing things from a local perspective means designing and implementing projects suitable for that community.

To assist in understanding and gaining insights one tool we apply is the Human Centred Design approach. We start with the people we are designing for and end with solutions that are tailored to suit their needs.

For example, to develop an agribusiness program we ask three questions:

• What is desired by the community?
• What can feasibly grow?
• What is a viable market?

All questions are equally weighted in importance, however, no matter what your ‘S’ initiative is, if it is not desired by the community, it is unlikely to succeed.

Through spending time with the community, listening to their concerns, seeing the world from their perspective, recognising the importance of human relationships and co-designing solutions we are more likely better to develop sustainable ‘S’ programs.

2. Partnering is key when developing ‘S’ initiatives. A natural resource company’s ‘S’ strategy can play a fundamental role in the sustainable development of a region. Many resource companies work in unique and isolated regions and sometimes you could be the only organisation paying for teachers in a school or supporting a health clinic. To reduce dependence and strengthen a ‘S’ program it is important to partner.

At Business for Development, we create partnership ecosystems including community, business, government, research and public and private funders — to work together to deliver specific outcomes.

Each entity in the partnership ecosystem brings different strengths, and through working together all participants benefit from being part of the partnership ecosystem. Our work has demonstrated that more can be achieved in partnership with one another than if you act alone.

For example, the Community Piggery Enterprise supported by Santos/Oil Search in Hela Province, Papua New Guinea, has come to fruition thanks to partnering with five local land cooperatives who have a vested interest in supporting their community to diversify the economy and establish an agribusiness that achieves sustainable development outcomes for their people.

3. Deliver the data. There is a lack of consensus in the industry surrounding what constitutes the ‘S’ in ESG. A 2021 Global ESG Survey found 51% of investors surveyed found the ‘S’ to be the most difficult to analyse and embed into investment strategies.

From a community development perspective, ‘S’ metrics include the impact on wider society through its relationships with the local communities, and are by their very nature qualitatively driven. It is also not just about limiting potential damage, but also about creating social benefits. Social benefits and igniting change take time to be delivered.

As we have found in our programs, achieving ‘S’ benefits takes deep commitment to the cause and considerable patience. To address this, we use the Theory of Change model. This model lays out the end social impact that is desired and all the outcomes, outputs and activities that need to occur to achieve that social impact.

The Theory of Change can be measured and used in company reporting. For Business for Development, this is also backed by using digital tools to gain a more robust understanding of program performance and improved decision-making.

For example, by using digital tools in our Kwale Agribusiness Program in Kenya we could clearly identify which initiatives were working for farmers and where further support was required.

4. Realise the risk and opportunities for your community. Often the people resource companies seek to support in their community development programs are risk-averse. If you are working in a developing country, many people are just surviving, and any failed ‘S’ initiative could result in pushing them further into poverty. It is important to understand your community’s mindset and appreciate their appetite for risk, and develop programs that do not put people in harm’s way.

In Kenya, when developing the Kwale Agribusiness Program, the team worked hard to understand farmers’ capabilities, access to resources (land, seeds, tools, finance etc) and their appetite to take risk. This appetite was very low as they had experienced crop failure over several decades.

To address the risk and opportunities, the team researched several options available in the market to address the barriers farmers were facing. These were piloted with a small number of farmers who were trusted in the community to demonstrate that given the right training and inputs success can be achieved. When the community saw the results, there was excitement about the opportunity.

This took time. It started with seven farmers, and slowly grew as trust was built. Now there are 3,500 farmers in the program whose lives have been positively changed.

As your ‘S’ initiatives scale up, risk changes for the community over time. For example, now your farmers are growing commercial level crops your work could be about finding a buyer versus leaving the community vulnerable to the wholesale market.

A good ‘S’ strategy is to always keep an eye out for potential future risk, reduce exposure to that risk and work towards building the resilience of the communities to manage that risk.

5. Focus on your people. A resource company’s work gets done through its people. There’s nothing more impactful on people, their work, and their performance than trust. ‘S’ initiatives work towards building trust with and between your staff and the community.

Your staff are an extension of your brand in the community. In our experience, resource companies that teach staff to be inclusive, engage with the community and treat their community with respect, build the trust needed for a social license to operate.

Business for Development understands to build strong ‘S’ programs that have an impact, you need strong local staff. More than 75% of our staff are from the country in which they work – because no one understands a community better than those who call it home.

Build your local teams, support them and empower them to implement initiatives that make their home a better place.

A resource company’s presence is finite, yet each aspect of the company’s ESG will have a lasting impact. Although ‘S’ may be difficult, now is the time to be proactive in the development of robust approaches to assessing social performance, integrating social criteria, implementing programs that support sustainable development and playing a stronger role in creating a more resilient and equitable economy.

From a business perspective, this will lead to pragmatic financial outcomes.

On a personal level, for those who are part of the ‘S’ initiatives to drive community empowerment, your life will be positively impacted forever. Because once a mine site is closed, your presence will be remembered by the community for a very long time – a sustainable legacy.